Millennials want bold flavors, convenient protein, natural, organic, gluten-free, and non-GMO, says Diamond Foods

By Elaine Watson contact

- Last updated on GMT

The Kettle brand is well-positioned to appeal to Millennials, with bold new flavors such as sriracha and maple bacon, says Diamond Foods CEO Brian Driscoll
The Kettle brand is well-positioned to appeal to Millennials, with bold new flavors such as sriracha and maple bacon, says Diamond Foods CEO Brian Driscoll
Diamond Foods is "competing with products addressing the trends in convenient protein, natural, organic, gluten-free, and non-GMO", CEO Brian Driscoll told analysts Thursday. And while its nuts and chips tap into some of these trends, he said, "We plan to deepen our participation".

Speaking on the firm’s fourth quarter 2014 earnings call, Driscoll said: "I wanted to take a minute to discuss our long-term vision for the company... We are presently competing with products addressing the trends in convenient protein, natural, organic, gluten-free, and non-GMO. 

"We plan to deepen our participation [through] new product innovation and via acquisition, if the right opportunity presents itself."

Kettle brand ready-to-eat popcorn appears to be off to a good start

The Kettle brand is well-positioned to appeal to Millennials, with bold new flavors such as sriracha and maple bacon, a natural positioning and a commitment to put its products through the Non-GMO Project verification process, he said, noting that US retails sales of Kettle brand chips rose 9.1% in the latest 12 weeks.

We believe that Kettle’s big authentic and great tasting flavor offerings combined with the non-GMO project verifications we have are central to the appeal the brand has with Millennial consumers and will only grow in importance over time.

“Based on this insight, we’ve launched authentic Kettle flavors into ready-to-eat popcorn, which appears to be off to a good start, ​[with] oven fries and snack nuts ​[under the Kettle brand to follow] in this fiscal year.”

New pepper and chilies, roasted garlic, and red curry flavors will hit stores in January, ​he added.

Pop Secret is ‘more of a kid-friendly Mom brand’

As for the Pop Secret brand, which was “more of a kid-friendly Mom brand”, ​he said, “We recently launched Pop Secret ready-to-eat popcorn with an exciting Nickelodeon Teenage Mutant Ninja Turtles license. After just a few weeks, this, launch appears to be off to a solid start.

Kettle brand popcorn

“As we move into fiscal year ‘15, we believe Pop Secret can continue to bring this fun positioning at permissibility into other snack segments.  

Turning to the firm’s nut business, Q4 sales rose 7.5% boosted in part by higher prices, but also by strong growth from Emerald 100-calorie packs (+20% in the last 12 weeks) and Diamond brand culinary almond products, he said.

Meanwhile, Emerald snack nut canisters would be gradually phased out and replaced by stand-up bags with “simple and transparent ingredient panels​”, he added.

We are presently competing with products addressing the trends in convenient protein, natural, organic, gluten-free, and non-GMO.”

Prices have been raised to reflect cost inflation on walnuts and almonds

Overall sales grew 9.6% in the quarter to $219.1m driven by 11.1% growth in snacks and 7.5% growth in nuts. However, gross margins suffered owing to continued tree nut cost inflation and “significant logistics cost inflation​”, he said.

“We've already taken action to counter these pressures, including price increases on our brands containing walnuts and almonds.”

For the full year, net sales rose very slightly to $865.2m while adjusted EBITDA rose 3.3% to $105.1m.

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